Apptio Announces Results for the First Quarter 2018

Apptio, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended

March 31,

2018

2017

*As Adjusted

Revenue

Subscription

$

45,471

$

36,187

Professional services

8,599

7,744

   Total revenue

54,070

43,931

Cost of revenue

Subscription

8,949

7,850

Professional services

8,465

7,569

   Total cost of revenue

17,414

15,419

   Gross profit

36,656

28,512

Operating expenses

Research and development

11,897

9,658

Sales and marketing

22,678

19,617

General and administrative

10,154

6,534

   Total operating expenses

44,729

35,809

   Loss from operations

(8,073)

(7,297)

Other income (expense)

Interest income and other, net

128

236

Foreign exchange gain (loss)

114

(53)

   Loss before provision for income taxes

(7,831)

(7,114)

Provision for income taxes

(268)

(25)

   Net loss

$

(8,099)

$

(7,139)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.19)

$

(0.19)

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

42,762

38,407

 *As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).

Apptio, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

March 31,

December 31,

2018

2017

*As Adjusted

Assets

Current assets

Cash and cash equivalents

$

190,066

$

55,069

Short-term investments

55,394

93,901

Accounts receivable, net of allowance for doubtful accounts of $317 and $413

56,022

68,782

Deferred costs

14,906

11,898

Prepaid expenses and other current assets

4,786

5,079

Total current assets

321,174

234,729

Long-term assets

Property and equipment, net of accumulated depreciation of $23,161 and $21,924

9,876

10,437

Long-term investments

7,979

--

Deferred costs, net of current portion

15,792

17,182

Acquisition-related intangible assets, net

19,517

--

Goodwill

30,572

--

Other long-term assets

1,036

983

Total assets

$

405,946

$

263,331

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

8,100

$

5,598

Accrued payroll and other expenses

21,450

16,481

Deferred revenue

116,610

116,831

Deferred rent

919

892

Capital leases

24

21

Total current liabilities

147,103

139,823

Long-term liabilities

Convertible senior notes, net

106,574

--

Deferred revenue, net of current portion

6,834

2,470

Deferred rent, net of current portion

3,237

3,483

Capital leases, net of current portion

117

26

Asset retirement obligation

205

199

Total liabilities

264,070

146,001

Stockholders' equity

Class A and Class B Common stock

5

4

Additional paid-in capital

346,888

314,301

Accumulated other comprehensive loss

(53)

(110)

Accumulated deficit

(204,964)

(196,865)

Total stockholders' equity

141,876

117,330

Total liabilities and stockholders' equity

$

405,946

$

263,331

 * As adjusted for the year ended December 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).

Apptio, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2018

2017

*As Adjusted

Cash flows from operating activities

Net loss

$

(8,099)

$

(7,139)

Adjustments to reconcile net loss to net cash provided by operating activities

   Depreciation and amortization

1,376

1,530

   (Accretion of discounts)/amortization of premiums on investments

(42)

23

   Amortization of acquisition-related intangible assets

583

--

   Amortization of deferred costs

3,936

3,268

   Amortization of debt discount and issuance costs

176

--

   Loss (gain) on disposal of property and equipment

47

(7)

   Stock-based compensation

4,952

3,625

   Impairment of acquired assets

573

--

   Accretion of capitalized loan fees

--

9

   Foreign exchange gain

(114)

(174)

   Change in operating assets and liabilities

Accounts receivable

19,015

20,098

Prepaid expenses and other assets

1,747

290

Deferred costs

(2,908)

(2,672)

Accounts payable

2,263

1,795

Accrued expenses

(2,792)

(958)

Deferred revenue

(10,713)

(7,570)

Deferred rent

(224)

(200)

Net cash provided by operating activities

9,776

11,918

Cash flows from investing activities

Business combinations, net of cash acquired

(34,569)

--

Purchases of property and equipment

(680)

(1,545)

Proceeds from sale of equipment

--

9

Proceeds from maturities of investments

49,400

6,800

Purchases of investments

(18,793)

(21,445)

Payments for security deposits

(31)

(9)

Net cash used in investing activities

(4,673)

(16,190)

Cash flows from financing activities

Proceeds from borrowings on convertible notes, net of issuance costs

139,438

--

Purchase of capped call

(17,092)

--

Proceeds from exercises of common stock options

7,515

558

Payment of initial public offering costs

--

(243)

Principal payments on capital lease obligations

(6)

(11)

Net cash provided by financing activities

129,855

304

Foreign currency effect on cash, cash equivalents and restricted cash

39

(135)

Net increase (decrease) in cash, cash equivalents and restricted cash

134,997

(4,103)

Cash, cash equivalents and restricted cash

Beginning of period

55,069

42,007

End of period

$

190,066

$

37,904

 *As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).

Apptio, Inc.

Results of Operations GAAP to Non-GAAP Reconciliation

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31,

2018

2017

*As Adjusted

 Revenue

 Subscription

$

45,471

$

36,187

 Professional services

8,599

7,744

    Total revenue

54,070

43,931

 Cost of revenue reconciliation:

 GAAP subscription

8,949

7,850

 Non-GAAP adjustment:

    Stock-based compensation

(319)

(358)

    Amortization of acquisition-related intangible assets

(583)

--

    Non-GAAP subscription cost of revenue

8,047

7,492

 GAAP professional services

8,465

7,569

 Non-GAAP adjustment:

    Stock-based compensation

(328)

(318)

    Non-GAAP professional services cost of revenue

$

8,137

$

7,251

 Gross profit and gross margin reconciliation:

 GAAP subscription gross profit

$

36,522

$

28,337

 Non-GAAP adjustment:

    Stock-based compensation

319

358

    Amortization of acquisition-related intangible assets

583

--

    Non-GAAP subscription gross profit

37,424

28,695

    GAAP subscription gross margin

80.3

%

78.3

%

    Non-GAAP subscription gross margin

82.3

%

79.3

%

 GAAP professional services gross profit

134

175

 Non-GAAP adjustment:

    Stock-based compensation

328

318

    Non-GAAP professional services gross profit

462

493

    GAAP professional services gross margin

1.6

%

2.3

%

    Non-GAAP professional services gross margin

5.4

%

6.4

%

 GAAP gross profit

36,656

28,512

 Non-GAAP adjustment:

    Stock-based compensation

647

676

    Amortization of acquisition-related intangible assets

583

--

    Non-GAAP gross profit

$

37,886

$

29,188

    GAAP gross margin

67.8

%

64.9

%

    Non-GAAP gross margin

70.1

%

66.4

%

 Operating expenses reconciliation:

 GAAP research and development

$

11,897

$

9,658

 Non-GAAP adjustment:

    Stock-based compensation

(1,393)

(1,041)

    Non-GAAP research and development

10,504

8,617

    As a % of total revenue, non-GAAP

19.4

%

19.6

%

 GAAP sales and marketing

22,678

19,617

 Non-GAAP adjustment:

    Stock-based compensation

(1,430)

(999)

    Non-GAAP sales and marketing

21,248

18,618

    As a % of total revenue, non-GAAP

39.3

%

42.4

%

 GAAP General and administrative

10,154

6,534

 Non-GAAP adjustment:

    Stock-based compensation

(1,482)

(909)

    Acquisition costs and impairment of acquired assets

(2,539)

--

    Non-GAAP general and administrative

6,133

5,625

    As a % of total revenue, non-GAAP

11.3

%

12.8

%

 Loss from operations reconciliation:

 GAAP loss from operations

(8,073)

(7,297)

 Non-GAAP adjustment:

    Stock-based compensation

4,952

3,625

    Acquisition costs and impairment of acquired assets

2,539

--

    Amortization of acquisition-related intangible assets

583

--

    Non-GAAP income (loss) from operations

$

1

$

(3,672)

 Loss from operations as a percentage of revenue:

    GAAP loss from operations

(14.9%)

(16.6%)

    Non-GAAP income (loss) from operations

0.0

%

(8.4%)

 Net loss reconciliation:

 GAAP

$

(8,099)

$

(7,139)

 Non-GAAP adjustment:

    Stock-based compensation

4,952

3,625

    Acquisition costs and impairment of acquired assets

2,539

--

    Amortization of acquisition-related intangible assets

583

--

    Non-GAAP Net loss

$

(25)

$

(3,514)

 Basic and diluted net loss per share

 reconciliation:

 GAAP

$

(0.19)

$

(0.19)

    Non-GAAP adjustment:

       Stock-based compensation

0.12

0.10

       Acquisition costs and impairment of acquired assets

0.06

0.00

       Amortization of acquisition-related intangible assets

0.01

0.00

   Non-GAAP

$

0.00

$

(0.09)

Shares used to compute basic and diluted GAAP and Non-GAAP net loss per share

42,762

38,407

 *As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).

Apptio, Inc.

Free Cash Flow Non-GAAP Reconciliation

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2018

2017

*As Adjusted

 Net cash provided by operating activities

$

9,776

$

11,918

 Less: purchases of property and equipment

(680)

(1,545)

 Free cash flow

$

9,096

$

10,373

 *As adjusted for the three months ended March 31, 2017 to reflect the adoption of Accounting Standards Update, ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606).